Elon Musk Is Being Sued by the SEC for Fraud

Tesla model 3 sedan

Tesla model 3 sedan

Despite these assurances, the SEC alleges that "Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source".

The shares fell 10 percent in after-hours trading on Thursday to $277.50, a fall of 25 percent since the August tweet.

At a press briefing in NY on Thursday, Stephanie Avakian, the co-director of the SEC's division of enforcement, said chairmen and CEOs of public companies had important responsibilities.

Musk abandoned the plan after less than three weeks. In doing so, the SEC claims, Musk ran afoul of the commission's regulations.

Elon Musk just got hit again with a lawsuit from Uncle Sam, who's pissed about the tweet he fired off about Tesla last month. and if the government gets its way it could cost Musk his job.

Regarding these statements from Musk, the SEC said, "Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions". Tesla confirmed that the DOJ asked the company for documents and that it was complying with the request. The SEC also seeks an order enjoining Musk from making false and misleading statements along with repayment of any gains as well as civil penalties.

In later tweets, he added that "investor support is confirmed" and a "special goal fund" might be created for investors who stick with the California-based company.

The legal suit filed claims Mr Musk "falsely indicated that it was virtually certain that he could take Tesla private" at a purchase price higher than Tesla's then stock price.

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Tesla shares were trading 12% lower in after-hours trading following the SEC's announcement.

The Wall Street Journal report that the SEC is also looking at whether Tesla misled about production problems with the Model 3.

CNBC reported on Friday that the proposed settlement would have barred Musk from being the chairman of Tesla's board of directors for two years, forced Tesla to add two new independent directors to the board, and required Musk and Tesla to pay a fine.

Elon Musk may be the latest person to learn that you should never tweet.

Musk tweeted August 7 that he had "funding secured" to privatize the electric automaker at $420 a share, causing a brief spike in Tesla´s share price.

Interested in Elon Musk? I have always taken action in the best interest of the truth, transparency and investors.

The SEC goes on to hilariously allege that Musk, who recently took a drag of a spliff during a Joe Rogan podcast, calculated the $420 price because he thought the weed reference would amuse his girlfriend Grimes.

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